National Consumer Disputes Redressal
Sant Rohidas Leather Industries & ... vs Vijaya Bank on 13 March, 2023
Author: R.K. Agrawal
Bench: R.K. Agrawal
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 2866 OF 2017 1. SANT ROHIDAS LEATHER INDUSTRIES & CHARMAKER DEVELOPMENT CORPORATION LTD. THROUGH ITS AUTHORIZED REPRESENTATIVE
REGD. OFFICE AT:
BOMBAY LIFE BUILDING,
5TH FLOOR,
45, VEER NARIMAN ROAD, MUMBAI-400001 MAHARASHTRA ...........Complainant(s) Versus 1. VIJAYA BANK THROUGH BRANCH MANAGER
VIJAYA SAMRUDDHI BRANCH(HNI),
TRANS AVENUE BUILDING,
PLOT NO. 1374-B,
GROUND FLOOR,
S.V.P. NAGAR,
ANDHERI (WEST), MUMBAI-400053 MAHARASHTRA ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE R.K. AGRAWAL,PRESIDENT HON'BLE DR. S.M. KANTIKAR,MEMBER
For the Complainant : For the Complainant Company : Mr. Pallav Shisodia, Sr. Advocate with
Mr. Kunal Cheema, Advocate
Mr. Rohit Sukhdeo, Advocate For the Opp.Party : For the Opposite Party : Mr. Vaibhav Dang, Advocate
Dated : 13 Mar 2023 ORDER
1. The present Consumer Complaint has been filed under Section 21 of the Consumer Protection Act, 1986 (for short "the Act") by Sant Rohidas Leather Industries & Charmakar Development Corporation Ltd. (hereinafter referred to as the Complainant Company) against Vijaya Bank (hereinafter referred to as Opposite Party Bank).
2. The brief facts of the case are that the Complainant Company, which is engaged in the activity of promoting the Leather Industry in the State of Maharashtra, for carrying out its aims and object, receives various funds from the Government of Maharashtra and till the funds are appropriately disbursed/utilized, the Complainant Company invests the same in Nationalized Bank in the form of Fixed Deposit Receipts (FDR) to earn interest on the surplus fund. In the year 2014, the then Chairman of the Complainant Company, Mr. R.D. Shinde, who was also the Secretary of the Social Justice Department of the State of Maharashtra referred Mr. Bhavesh Bhat, an Investment Consultant to the Managing Director of the Complainant Company for assisting the Complainant Company for investing the funds available. For investing the surplus fund in FDR, proposals were called from various Banks. After analyzing the various proposals received from various Banks, including that of the Opposite Party Bank, the Complainant Company invested a sum of ₹9,00,00,000/- (Rupees Nine Crores only) with the Opposite Party Bank by way of Fixed Deposit for a period of one year w.e.f. 28.02.2014, i.e., ₹2,00,00,000/- and ₹7,00,00,000/- were transferred to Opposite Party Bank through RTGS from Bank A/c Nos. 10043795311 and 10043795300 respectively. It was averred that on 04.03.2014, the Complainant Company through one Mr. Pravin, received Fixed Deposit Receipt bearing No. 545114, dated 03.03.2014 (A/c No. 511602301000002) for a sum of ₹9,00,00,000/-. On 26.03.2014, they received a sum of ₹6,58,125/- after deducting TDS of ₹73,125/- from the Opposite Party Bank vide Pay Order No. 524585 dated 26.03.2014 towards interest for the 1st Quarter which was credited in the A/c No. 10043795311 of the Complainant Company.
3. The Complainant Company was surprised to receive a letter dated 27.06.2014 from the Opposite Party Bank informing that a loan of ₹8,10,00,000/- was sanctioned against the Term Deposit/Overdraft in favour of the Complainant Company on 06.03.2014 and as on 19.06.2014 the outstanding amount was ₹809.21 lakh. Since the Complainant Company never applied for any such loan facility, they approached the Opposite Party Bank seeking enquiry. Mr. Taranjeet Singh, who was the then Branch Manager of the Opposite Party Bank informed that Fixed Deposit Receipt available with the Complainant Company was never issued by the Bank and the Original Fixed Deposit Receipt is in the possession of the Opposite Party Bank. Since they never applied for any overdraft facility, realizing it a case of fraud, forgery and cheating, the Complainant Company loaded a Police Complaint dated 16.07.2014 with the Economic Offence Wing, Crime Branch, Mumbai. After obtaining the certified copies of all the documents related to the Over Draft facility from the Opposite Party Bank, an FIR was immediately registered on 07.08.2014.
4. The Complainant Company vide letter dated 28.10.2014 requested the Opposite Party Bank to reverse the entries in respect of wrongly debited amounts of interest on the fraudulently granted overdraft, which was not acceded to by the Opposite Party Bank. Thereafter, the Complainant Company addressed a letter dated 08.09.2016 to the Reserve Bank of India, requesting that necessary directions be issued to the Opposite Party Bank but in vain. Despite repeated follow ups and being hopeful that on the date of maturity the Opposite Party Bank would honour the Fixed Deposit amount, the Complainant Company were shocked to receive a letter dated 04.03.2017 from the Opposite Party Bank, informing that the alleged overdraft facility account has been closed by adjusting the proceeds of the Fixed Deposit maturity amount and the balance amount of ₹50,58,847/- was remitted through Demand Draft bearing No.245983 dated 04.03.2017. Since the allegation and unilateral closure of the FDR and the unilateral adjustment with the overdraft account was not acceptable to the Complainant Company, it returned the Demand Draft No. 245983 alongwith reply letter dated 27.03.2017 to the Opposite Party Bank with a request to make payment of ₹9,00,00,000/- alongwith accrued interest @9.75% till the date of realization. In response, the Opposite Party vide letter dated 24.04.2017 acknowledged the receipt of the Demand Draft and informed that since the matter is sub-judice before the Police Authorities they did not want to enter into any fresh controversy.
5. Alleging deficiency in service and unfair trade practice on the part of the Opposite Party Bank, the Complainant Company has filed the present Complaint seeking following reliefs:-
"a) The Opposite Party Bank be held liable for deficiency in service;
b) The Opposite Party Bank be directed to pay to the Complainant Company the principal amount of ₹9,00,0000/- alongwith interest @9.75% p.a. from 28.02.2014 upto payment/realisation, being the repayment of the FDR amount with interest thereon.
c) The Opposite Party Bank be directed to pay an amount of ₹10,00,000/- as compensation for default in timely repayment of the amount of ₹9,00,00,000/- and interest thereon.
d) Any other just and equitable orders even if not specifically prayed for, be passed in the interest of justice, please."
6. The Complainant Company submitted that the facts of the present case are squarely covered by the Judgment passed by this Commission in the case of 'Mumbai Metropolitan Region Development Authority vs. Dena Bank & Ors.' [CC No. 259 / 2014 decided on 03.06.2016] and prayed that the Consumer Complaint be allowed in terms of the prayer clause of the Complaint.
7. Per contra, the Opposite Party Bank contested the Complaint by contending that the Complainant Company is engaged in commercial activity as such does not fall within the definition of 'Consumer' as defined under Section 2(1)(d) of the Consumer Protection Act, 1986. The Complainant Company admittedly received information regarding term deposit / Overdraft (secured) facility of ₹8.10 Crore on 01.07.2014, the Complaint was filed with Economic Offence Wing, Crime Branch Mumbai on 16.07.2014, FIR was registered on 07.08.2014, the Complainant Company got information vide letter dated 18.07.2014 that the Fixed Deposit Receipts available with the Complainant Company are fake and despite Complainant Company's letter dated 28.10.2014, the Opposite Party Bank did not accede to Complainant Company's demand for reversal of entries in respect of the amounts of interest debited / adjusted. The Complainant Company was also aware that the amount of ₹9,00,00,000/- was kept in Term Deposit for a period of one year only, i.e., 28.02.2015. Despite that the Complaint was filed on 25.09.2017, i.e., after a delay of 2 years as such the Complaint is barred by limitation.
8. According to the Opposite Party Bank, admittedly, the transaction between the Complainant Company and the Opposite Party Bank was done through Mr. Bhavesh Bhatt / Mr. Pravin, but at this stage the Complainant Company cannot take a complete U-Turn by saying that the said persons were not authorized by it and the actions done through them are not binding on the Complainant Company as such the Complaint is barred by rule of estoppel.
9. The Opposite Party Bank also contended that since the nature of controversy, particularly relating to allegations of fraud, forgery etc., the Complainant should be relegated to the Civil Court and the present Consumer Complaint is not an appropriate remedy for the adjudication of such disputes.
10. The Opposite Party Bank also contended that the present Complaint is an abuse of process of law as the Complainant Company had filed forged and fabricated Fixed Deposit Receipt No. 545114 for ₹9,00,00,000/- which was never issued by the Opposite Party Bank. On merits, it is alleged that the negligence, if any, was entirely on the part of the Complainant Company since the Fixed Deposit Receipts held by the Complainant Company are forged and fabricated documents. It is further alleged that the Fixed Deposits Receipts which were duly discharged and pledged with the Opposite Party Bank are entirely different from the Fixed Deposit Receipts held by the Complainant Company.
11. It was contended that the Judgment passed by this Commission in the case of 'Mumbai Metropolitan Region Development Authority vs. Dena Bank & Ors.' [supra] as relied upon by the Complainant Company, is not applicable to the present case as they have followed the procedure for KYC as stated in the said Judgment and the correctness of the Judgment is pending before the Hon'ble Supreme Court of India.
12. It was further contended that there was no deficiency in service on their part and it was prayed that the Consumer Complaint be dismissed.
13. We have heard Mr. Pallav Shisodia, learned Senior Counsel for the Complainant Company, Mr. Vaibhav Dang, learned Counsel for the Opposite Party Bank and perused the Complaint, Written Statement, the documents filed by the respective Parties and have given a thoughtful consideration to the various pleas raised by them.
14. First of all, we would consider the plea raised by the Opposite Party Bank that the Complainant Company was engaged in the commercial activity as such it does not fall within the definition of 'Consumer' as defined under section 2(1)(d) of the Consumer Protection Act, 1986. It is the case of the Complainant Company that it is engaged in the activity of promoting the Leather Industry in the State of Maharashtra. For carrying out is aims and objects it received Funds from the Government of Maharashtra and till Funds are appropriately disbursed / utilized, it invests the same in Nationalised Banks in the form of Fixed Deposit Receipts to receive the interest on the surplus fund and therefore, it invested ₹9,00,00,000/- (Rupees Nine Crore) in Fixed Deposit Receipts with the Opposite Party Bank for a period of one year with effect from 28.02.2014. On its behalf the services of Mr. Bhavesh Bhat, an Investment Consultant and Mr. Pravin were taken. Section 2(1)(d) of the Consumer Protection Act, 1986 defines 'Consumer' as follows:-
"Section 2(1)(d) of the 1986 Act defines "consumer" as follows:
"2. (1)(d) "consumer" means any person who--
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose.
Explanation.--For the purposes of this clause, "commercial purpose" does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment."
The above Explanation clause was added to Section 2(1)(d) by way of Ordinance 24 of 1993 (subsequently replaced by Amendment Act 50 of 1993), with effect from 18-6-1993. Amendment Act 50 of 1993 also added "housing construction" to the definition of "service" under Section 2(1)(o) of the 1986 Act."
15. Thus, a person who avails of services for any commercial purpose cannot be termed as 'Consumer' so as to come within the provisions of the Consumer Protection Act, 1986.
16. The Hon'ble Supreme Court in 'Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and Ors.' (2020) 2 SCC 265, had occasion to consider in detail, the question as to who would fall under Section 2(1)(d) of the Consumer Protection Act, 1986 and to be treated as 'Consumer' for availing of services and after referring to its earlier decisions the Hon'ble Supreme Court has laid down the broad-principles for determining whether an activity or transaction is 'for a commercial purpose' or not. For ready reference, Para Nos. 12, 13, 14, 15, 16 & 19 of the 'Lilavati Kirtilal Mehta Medical Trust (supra)', which are relevant in the present case, are reproduced herein below:-
"12. In Laxmi Engg. [Laxmi Engg. Works v. PSG Industrial Institute, (1995) 3 SCC 583], which is one of the leading authorities on this point, a two-Judge Bench of this Court elucidated upon the meaning of "commercial purpose" as follows : (SCC pp. 591-92, paras 10-11)
"10. A review of the provisions of the Act discloses that the quasi-judicial bodies/authorities/agencies created by the Act known as District Forums, State Commissions and the National Commission are not courts though invested with some of the powers of a civil court. They are quasi-judicial tribunals brought into existence to render inexpensive and speedy remedies to consumers. ... The idea was to help the consumers get justice and fair treatment in the matter of goods and services purchased and availed by them in a market dominated by large trading and manufacturing bodies. Indeed, the entire Act revolves round the consumer and is designed to protect his interest. The Act provides for "business-to-consumer" disputes and not for "business-to-business" disputes. This scheme of the Act, in our opinion, is relevant to and helps in interpreting the words that fall for consideration in this appeal.
11. ... Controversy has, however, arisen with respect to meaning of the expression "commercial purpose". It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. "Commercial" denotes "pertaining to commerce" (Chamber's Twentieth Century Dictionary); it means "connected with, or engaged in commerce; mercantile; having profit as the main aim" (Collins English Dictionary) whereas the word "commerce" means "financial transactions especially buying and selling of merchandise, on a large scale" (Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods 'with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit' he will not be a "consumer" within the meaning of Section 2(1)(d)(i) of the Act. ... The Explanation reduces the question, what is a "commercial purpose", to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the Explanation viz. "uses them by himself", "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood."
13. In the aforementioned discussion in Laxmi Engg. [Laxmi Engg. Works v. PSG Industrial Institute, (1995) 3 SCC 583] , this Court relied upon Synco Textiles (P) Ltd. v. Greaves Cotton and Co. Ltd. [Synco Textiles (P) Ltd. v. Greaves Cotton and Co. Ltd., 1990 SCC OnLine NCDRC 3 : (1991) 1 CPJ 499] In Synco Textiles [Synco Textiles (P) Ltd. v. Greaves Cotton and Co. Ltd., 1990 SCC OnLine NCDRC 3 : (1991) 1 CPJ 499], a four-Member Bench of the National Commission headed by V. Balakrishna Eradi, J., expounded upon the meaning of the term "commercial purpose", prior to the insertion of the Explanation clause to Section 2(1)(d) of the 1986 Act : (Synco Textiles case [Synco Textiles (P) Ltd. v. Greaves Cotton and Co. Ltd., 1990 SCC OnLine NCDRC 3 : (1991) 1 CPJ 499] , SCC OnLine NCDRC paras 5-6 & 8)
"5. ...The words "for any commercial purpose" are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit....
6. Going by the plain dictionary meaning of the words used in the definition section the intention of Parliament must be understood to be to exclude from the scope of the expression "consumer" any person who buys goods for the purpose of their being used in any activity engaged on a large scale for the purpose of making profit. ... It is obvious that Parliament intended to restrict the benefits of the Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large scale manufacturing or processing activity carried on for profit. In order that exclusion clause should apply it is however necessary that there should be a close nexus between the transaction of purchase of goods and the large scale activity carried on for earning profit.
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8. There is a close and direct nexus between the purpose of purchase of the generating sets and the commercial activity of manufacturing of edible oils for trade carried on by the appellant company, since the generating sets were intended to be used, as and when the need arose, for generating electric current for manufacture of edible oils for the purpose of trade. We do not, therefore, find any reason to interfere with the view taken by the State Commission that the appellant is not a "consumer"."
14. Recently, a two-Judge Bench of this Court, comprising of one of us, in Paramount Digital Colour Lab [Paramount Digital Colour Lab v. AGFA (India) (P) Ltd., (2018) 14 SCC 81 : (2018) 4 SCC (Civ) 467] has re-emphasised the importance of there being a "close nexus" between the purpose for which the good or service is availed of and a large-scale profit activity in order to classify such a transaction as commercial in nature, as illustrated below : (Paramount Digital Colour Lab case [Paramount Digital Colour Lab v. AGFA (India) (P) Ltd., (2018) 14 SCC 81 : (2018) 4 SCC (Civ) 467] , SCC pp. 85 & 87, paras 12 & 17) "12. ... It is therefore clear, that despite "commercial activity", whether a person would fall within the definition of "consumer" or not would be a question of fact in every case. Such question of fact ought to be decided in the facts and circumstances of each case.
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17. ... Since there is nothing on record to show that they wanted the machine to be installed for a commercial purpose and not exclusively for the purposes of earning their livelihood by means of self-employment, the National Commission was not justified in concluding that the appellants have utilised the services of an operator or a helper to run a commercial venture. One machine does not need many operators or helpers to complete the work entrusted. Since the appellants were two partners, they must have been doing the work on their own, of course, may be with the aid of a helper or an operator. The machine would not have been used in a large-scale profit-making activity but, on the contrary, the appellants purchased the machine for their own utility, personal handling and for their small venture which they had embarked upon to make a livelihood. The same is distinct from large-scale manufacturing or processing activity carried on for huge profits. There is no close nexus between the transaction of purchase of the machine and the alleged large-scale activity carried on for earning profit. Since the appellants had got no employment and they were unemployed graduates, that too without finances, it is but natural for them to raise a loan to start the business of photography on a small scale for earning their livelihood."
Therefore this Court in Paramount Digital Colour Lab [Paramount Digital Colour Lab v. AGFA (India) (P) Ltd., (2018) 14 SCC 81 : (2018) 4 SCC (Civ) 467] held that the purchase of a machine for the appellants' photography business, which was a small-scale business meant for earning their livelihood, would not be interpreted as being for a "commercial purpose".
15. It is true that the aforementioned decisions were rendered in the context of deciding whether the goods or services availed of in the facts of those cases were for a commercial purpose or exclusively for the purpose of self-employment. This does not mean, however, that in every case a negative test has to be adopted wherein any activity that does not fall within the ambit of "earning livelihood by means of self-employment" would necessarily be for a commercial purpose. We reject Respondent 1's argument in this regard. The Explanation clause to Section 2(1)(d) of the 1986 Act is only clarificatory in nature, as was highlighted by this Court in Laxmi Engg. [Laxmi Engg. Works v. PSG Industrial Institute, (1995) 3 SCC 583] : (SCC p. 594, para 14) "14. Yet another clarification; the Explanation, in our opinion is only explanatory; it is more in the nature of a clarification--a fact which would become evident if one examines the definition (minus the Explanation) in the context and scheme of the enactment. As indicated earlier, the Explanation broadly affirms the decisions of the National Commission. It merely makes explicit what was implicit in the Act. It is not as if the law is changed by the said Explanation; it has been merely made clearer."
Therefore the Explanation clause only re-affirms the definition of "consumer" as it already exists.
16. Ultimately, whether or not a person is a consumer or whether an activity is meant for a commercial purpose will depend upon the facts and circumstances of each case. It may be the case that a person who engages in commercial activities has purchased a good or availed of a service for their personal use and consumption, or for the personal use of a beneficiary, and such purchase is not linked to their ordinary profit-generating activities or for creation of self-employment. Such a person may still claim to be a "consumer." For example, a large corporation may hire the services of a caterer or a 5-star hotel for hosting a function for its employees and their families. If there is any deficiency in service, the service-provider cannot claim that merely because the person availing of the service is a profit-generating entity, and because such transaction does not relate to generation of livelihood through self-employment, they do not fall under the definition of a "consumer". A commercial entity may also be a consumer depending upon the facts of the case. It is not the identity of the person but the purpose for which the transaction is made which is relevant.
............
19. To summarize from the above discussion, though a straightjacket formula cannot be adopted in every case, the following broad principles can be culled out for determining whether an activity or transaction is 'for a commercial purpose':
(i) The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, 'commercial purpose' is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities.
(ii) The purchase of the good or service should have a close and direct nexus with a profit-generating activity.
(iii) The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary.
(iv) If it is found that the dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of 'generating livelihood by means of self-employment' need not be looked into."
17. Applying the principles laid down by the Hon'ble Supreme Court in 'Lilavati Kirtilal Mehta Medical Trust' (supra), we find that investing ₹9,00,00,000/- (Rupees Nine Crore) by the Complainant Company with the Opposite Party Bank in Fixed Deposit for a period of one year, was clearly having a direct nexus with the profit generating, i.e., earn interest on the Surplus Fund and further the intention for the transaction was to facilitate some kind of profit generation for the Complainant Company. Therefore, in our considered opinion, availing the services by the Complainant Company from the Opposite Party Bank by investing a sum of ₹9,00,00,000/- in Fixed Deposit for a period of one year was commercial activity and, therefore, the Complainant Company cannot be termed as 'Consumer' as defined under Section 2(1)(d) of the Consumer Protection Act, 1986. Therefore, the Complainant Company cannot be permitted to invoke the provisions of the Consumer Protection Act, 1986 and as such the Consumer Complaint is liable to be dismissed. We order accordingly.
18. Since the Complainant Company failed to establish its case that it did fall within the meaning of 'Consumer' as defined under Section 2(1)(d) of the Consumer Protection Act, 1986, we do not find it necessary to go into the other pleas raised by the Opposite Party Bank. In the result, the Consumer Complaint is dismissed without any order as to Costs.
......................J R.K. AGRAWAL PRESIDENT ...................... DR. S.M. KANTIKAR MEMBER